More fodder for the DELL thread to ruminate over, from Bloomberg.
Dell
Even Dell Computer Corp. isn't immune. The No. 1 direct PC seller and best-performing stock on the Standard & Poor's 500 Index for three years running may be shipping fewer machines than expected this quarter. At the same time, its average selling prices are dropping, one analyst said.
That's led at least one analyst to cut profit predictions and forecast a second straight quarter when sales rise less than 50 percent. ''Fifty percent-plus growth (for Dell) is history,'' said Kumar. Dell's growth is slowing as Compaq and other rivals sell more computers directly to customers, imitating a strategy that's helped Dell vault past competitors.
Dell's sales are forecast to rise about 36 percent to $5.35 billion in the quarter ending April 30, following 38 percent sales growth in the fourth quarter. Earnings are expected to rise to 16 cents a share, from a split-adjusted 11 cents.
Less Buying
Part of the problem is that businesses aggressively replaced older machines for the past three years as newer technology came out. Now there are few software programs that require new PCs and more reasons to hold off buying.
Companies like Bayer AG North America, which uses only Dell computers, have slowed the addition of new PCs. Bill Gaughn, who oversees technology purchases for Bayer in North America, said the company has replaced its entire base of PCs since mid-1997, but is now just renewing leases and doesn't have plans to add new machines.
That's already hurt companies like Hewlett-Packard Co., which in February reported fiscal first-quarter sales lagged expectations. H-P was particularly hurt by lower prices for printers and personal computers.
IBM, the world's largest computer maker, is struggling with slower-than-expected sales of all computers. That includes PCs, which are being crimped by falling prices, analyst Niles said.
Micron Electronics Inc.'s fiscal second-quarter sales slid 25 percent, and the No. 3 direct seller of PCs reported earnings this week that dropped in line with reduced expectations.
Ingram Micro Inc., the world's biggest wholesale distributor of PCs, said it will cut 10 percent of its workforce and warned that first-quarter earnings will lag forecasts.
Consumers
The companies most likely to benefit this quarter are those with strong consumer lines. Apple Computer Inc. will do well in its second quarter ending next Wednesday thanks to its multicolored iMacs and new, powerful G3 computers. Apple is expected to earn 57 cents, compared with 42 cents a year earlier, according to analysts polled by First Call Corp.
Gateway 2000 Inc. also is expected to have higher earnings. The No. 2 direct seller of PCs is expected to earn 60 cents a share, according to First Call. Kumar said the company could do even better. A year earlier, Gateway's profit was 48 cents.
PC unit shipments are forecast to rise about 13 percent in the second quarter from a year earlier, according to IDC. A rebound in Asia Pacific and Japan after big declines last year could help boost shipments.
After that, the outlook gets cloudier. If Year 2000 issues are resolved early, companies may buy more machines. If not, the second half could be rocky, analysts said. Total PC shipments are forecast to rise 14.3 percent in 1999, up 2.3 percentage points from last year.
1st-Qtr Year-Ago Number of Company Estimate Earnings Analysts Advanced Micro -0.55 -0.39 18 Apple# 0.57 0.38 18 Dell* 0.16 0.11 31 Compaq 0.32 0.01 32 Gateway 0.60 0.48 23 IBM 1.41 1.06 21 Intel 1.10 0.81 32 Micron Electronics@ 0.07 0.26 12 *Fiscal first quarter ending April 30 #Fiscal second quarter ending March 31 @Actual results for fiscal first quarter ended March 4, year-ago results include $156.2 million gain
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